Adecoagro SA (0DWL.L) QQ4 2024 Results — Revenue Growth with Margin Pressures but Strong Free Cash Flow and Solid Balance Sheet
Executive Summary
Adecoagro SA delivered a mixed QQ4 2024 performance. Revenue rose 17.9% year over year to USD 374.22 million, supported by higher activity across its diversified asset base, but gross profit contracted sharply to USD 24.23 million, yielding a gross margin of 6.5%. The substantial cost of revenue, combined with elevated other expenses, drove a material drag to pretax earnings, resulting in a negative pretax position of USD 0.86 million. After a sizable tax benefit, net income reached USD 16.37 million, with an earnings per share (EPS) of USD 0.032. EBITDA stood at USD 99.89 million and the company posted an operating income of USD 47.55 million, translating to an operating margin of about 12.7%. The quarterly results illustrate the resilience of the business in generating cash flow despite margin compression.
From a balance-sheet and cash-flow perspective, Adecoagro remains in a solid liquidity position. Cash and cash equivalents totaled USD 211.24 million at period end, and net debt was USD 910.34 million. The company generated USD 163.46 million of operating cash flow and achieved free cash flow of USD 105.75 million for QQ4 2024, underscoring the capacity to support debt servicing and potential deleveraging over time. The current ratio stood at 2.54x, with a debt-to-capitalization ratio of 0.45x and a debt-to-equity ratio of 0.82x, indicating a reasonably conservative capital structure given the cash-generative operations. However, profitability metrics remain a key hurdle versus peers, as margins are materially lower and total expenses exhibit volatility, principally from other and financing components. Management commentary (where available) is muted in the provided data, with no earnings-call transcript included to anchor qualitative guidance.
Overall, the QQ4 2024 results affirm Adecoagro’s ability to generate cash and maintain liquidity in a volatile commodity environment, but the trajectory for margin expansion and leverage normalization will be the principal driver of longer-term value for investors. The absence of explicit forward guidance in the provided data suggests a cautious near-term stance, pending commodity price signals, input costs, and potential strategic asset actions.
Total other income/expenses net: USD -48.40 million
Income before tax: USD -0.86 million; tax expense: USD -17.03 million (tax benefit)
Financial Highlights
Revenue: USD 374.22 million; YoY +17.85%, QoQ -20.63%
- gross profit: USD 24.23 million; gross margin 6.47%; YoY -84.04%, QoQ -79.51%
- EBITDA: USD 99.89 million; EBITDA margin 26.69%
- Operating income: USD 47.55 million; operating margin 12.71%
- Total other income/expenses net: USD -48.40 million
- Income before tax: USD -0.86 million; tax expense: USD -17.03 million (tax benefit)
- Net income: USD 16.37 million; net margin 4.37%
- EPS: USD 0.032 (diluted USD 0.032)
- Cash flow: Operating cash flow USD 163.46 million; capex USD -57.71 million; free cash flow USD 105.75 million
- Cash balance: USD 211.24 million at end; Net debt: USD 910.34 million; Total debt: USD 1,121.59 million
- Balance sheet health: current ratio 2.54x; quick ratio 1.10x; cash ratio 0.53x; debt-to-capitalization 0.45x; debt-to-equity 0.82x
- Per-share metrics: FCF per share USD 0.932; operating cash flow per share USD 1.456; price/earnings 14.38x; price/sales 2.39x; dividend yield ~1.7%
- Efficiency: receivables turnover 2.47x; inventory turnover 0.523x; asset turnover 0.126x; capital expenditure roughly USD 57.7 million
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
374.22M
17.85%
-20.63%
Gross Profit
24.23M
-84.04%
-79.51%
Operating Income
47.55M
-61.49%
60.20%
Net Income
16.37M
-80.17%
-12.53%
EPS
0.03
-80.00%
-15.79%
Key Financial Ratios
currentRatio
2.54
grossProfitMargin
23.5%
operatingProfitMargin
14%
netProfitMargin
4.15%
returnOnAssets
0.53%
returnOnEquity
1.2%
debtEquityRatio
0.82
operatingCashFlowPerShare
$1.46
freeCashFlowPerShare
$0.93
dividendPayoutRatio
97.8%
priceToBookRatio
0.69
priceEarningsRatio
14.38
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings call transcript data were provided in the supplied materials. Consequently, no management quotes or thematic highlights from an QQ4 2024 earnings call can be cited. If a transcript becomes available, we will extract themes around strategy execution, operational efficiency programs, and market conditions to enrich the forward-looking commentary.
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Forward Guidance
The data set does not include explicit management guidance for QQ1 2025 or beyond. In lieu of formal guidance, the outlook should be framed around macro and company-specific dynamics:
- Revenue trajectory: Expect seasonal variability given the agriculture and agro-industrial nature of the business. Q4 2024 revenue rose YoY but declined QoQ; investors should monitor seasonality, harvest cycles, and commodity price trends.
- Margin normalization: Gross margin remains a challenge, with costs of revenue elevated relative to current revenue. Any improvement in input costs, efficiency in procurement, and product mix (e.g., higher-margin cogeneration and byproduct revenue) could lift margins toward mid-teens EBITDA margins.
- Cash flow and capital allocation: Ongoing positive free cash flow supports deleveraging and potential selective capital returns. Watch capex cadence, working capital dynamics, and whether the company deploys cash toward asset dispositions or strategic land transactions as part of its portfolio optimization.
- Leverage and financing: With net debt around USD 0.91 billion and an interest burden, ongoing monitoring of refinancing risk and interest coverage is prudent, especially if operating conditions worsen or if commodity cycles remain volatile.
Overall, the investment thesis remains contingent on margin recovery, disciplined capital allocation, and the realization of potential value from asset optimization and cogeneration/sugar-ethanol activities.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0DWL.L Focus
6.47%
14.00%
1.20%
14.38%
0GN6.L
90.30%
85.20%
6.95%
2.49%
0EEV.L
0.00%
0.00%
0.00%
0.00%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Neutral-to-modestly-positive with a cautious tilt. The QQ4 2024 results demonstrate resilience in cash flow and a balance-sheetful of liquidity, which supports near-term debt servicing and potential deleveraging. However, gross margin compression and earnings volatility underscore earnings quality concerns relative to peers. The investment thesis hinges on improving profitability through cost discipline, potential asset dispositions, and value-creation from cogeneration and sugar/ethanol activities. Absent explicit forward guidance, investors should monitor commodity price trends, input costs, working-capital management, and any strategic assets actions that could unlock value. The stock trades at a price-to-sales of approximately 2.39x and an enterprise-value-to-EBITDA multiple near 27.8x, suggesting limited upside unless margin recovery and deleveraging materialize.
Key Investment Factors
Growth Potential
Potential growth drivers include optimization of the existing asset base (farmland, dairy, and sugar/ethanol), expansion of cogeneration capacity, and monetization opportunities through asset dispositions or productive land redeployment. The company’s diversified agricultural platform provides optionality across crop cycles and commodity prices, which, if managed effectively, could lift EBITDA margins over time.
Profitability Risk
Key risks include commodity price and currency volatility (especially ARS/BRL exposures), climate/weather risks impacting harvests, execution risk in asset dispositions, regulatory and tax changes in Latin America, and leverage-related refinancing or interest-rate sensitivity given the USD-denominated debt.
Financial Position
Strong liquidity metrics (current ratio 2.54x, cash balance USD 211.24m) and positive operating cash flow (USD 163.46m) support near-term flexibility. However, elevated debt (total debt USD 1,121.59m; net debt USD 910.34m) and a relatively modest gross margin suggest a conservative balance-sheet stance is warranted until profitability improves.
SWOT Analysis
Strengths
Positive free cash flow generation (USD 105.75m in QQ4 2024) and solid operating cash flow (USD 163.46m)
Diversified asset base across crops, dairy, sugar/ethanol, and cogeneration provides multiple revenue streams
Healthy liquidity with cash US USD 211.24m and current ratio 2.54x
Moderate leverage with total debt USD 1,121.59m and strong collateralization across assets
Weaknesses
Low gross margin (6.47%) and material margin compression vs prior year
High other expenses and a negative pretax position in Q4 2024 indicating profitability volatility
Relatively high debt levels (net debt USD 910.34m) and modest interest coverage (3.20x)
Seasonality and commodity-price exposure create earnings volatility and revenue mix risk
Opportunities
Asset disposition or portfolio optimization to unlock value
Expansion of cogeneration and sugar/ethanol segments to lift margins
Potential realignment of working capital and inventory management to improve efficiency
Strategic land redeployment could boost returns and diversify revenue streams
Threats
Commodity and currency volatility (ARS/BRL exposure) impacting margins and revenue
Weather/climate risks affecting harvest quality and yield
Regulatory and tax regime changes in Latin America
refinancing risk and rising interest rates could pressure leverage and funding costs